How to benefit from the increasing adoption of subscription and pay-per-use models

 

Mark Wass, Strategic Sales Director, UK and North EMEA at CloudBlue

Over the past two years, consumer behaviour has changed – not only due to the global pandemic and its effects on shopping experiences and habits, but also the uprise in digital shopping and subscription models. Vendors themselves are increasingly turning to subscription and pay-per-use activities, for example, in productivity and communication services, with the attractive benefits of the speed, flexibility as well as recurring revenue offered. Independent Software Vendors (ISVs) in particular should take advantage of this development and optimise their indirect sales with subscription models via marketplaces, to turn attention to such benefits and the reach of products.

Creating a new success model for the future

By 2024, it is expected that global sales via B2B marketplaces could reach a volume of 3.6 billion US dollars, and one in three B2B buyers will purchase at least half of their products via a B2B marketplace. B2B marketplaces represent a powerful additional channel for the marketing and sale of products, helping to open new revenue streams, reduce marketing and transaction costs, and internationalise their own distribution, including through new trading partnerships. Customers are offered round-the-clock service and a better and more transparent shopping experience. They can compare prices and products in a single source and – as with Amazon, for example – consolidate the payment process.

Business leaders today can assemble a complex enterprise architecture with a few clicks of the mouse – on a rental and hyperscalable basis. As a result, both the end customer and IT providers benefit from new digital ecosystems. The advantage for IT providers is that they can remain competitive, conquer new business models, generate higher and regular revenue and benefit from larger margins as well as more flexibility. And end customers benefit from having access to the latest and greatest technology at their fingertips to more readily accomplish their business goals.

Creating a sufficient marketplace ecosystem

With the right marketplace provider, a digital and indirect distribution service that is hyperscalable can be set up quickly and efficiently. A digital marketplace is in no way in conflict with classic channel sales or the marketplaces of hyperscalers. On the contrary, reach and sales can be increased exponentially in the shared ecosystem. As a result, ISVs are often reliant on the volume of products or software solutions sold in sales. This is why the integration of marketplaces and hyperscalers depends on the volume and revenue that can be increased exponentially, while minimally growing costs.

Companies are now using platform providers that enable direct and indirect channel management and channel partner management. For example, facilitating onboarding and precise agreements, catalogue and product management (listings, pricing), channel partner billing, invoicing and a reseller platform too. In addition, resellers can manage their own customers and serve them with the help of self-service functionalities.

Driving growth lies with hyperscaler marketplaces

Companies can no longer avoid the large hyperscalers, both in terms of supply and purchase. To benefit from this, ISVs need to find ways to break away from familiar sales patterns. After all, large hyperscalers including AWS, Azure and Google Cloud account for 70% of the global public cloud market share. When ISVs publish to the integrated hyperscaler marketplaces, they increase product availability and open new cross-selling opportunities within subscription packages. The global product reach and access to attractive annual recurring revenue streams stresses the importance for ISVs to join these marketplaces and start promoting and selling their own products there.

Growing sales through international expansion 

As ISVs grow and expand into new countries and regions, central management is required for all sales support with the addition of subsidiaries. As a result, different guidelines and local regulations must be observed and corresponding multilingual and complex product information management (PIM) functions are needed to help businesses that are looking to expand their ISVs outside of their country. But in doing so, companies need to start managing both direct and indirect business in multiple countries and consequently in varying currencies.

Medium-sized ISVs in particular are often not yet well positioned in terms of their international expansion. Most of their revenue is still generated at a regional level and most cite this as an important pillar for their growth. Yet the signs of greater success and efficiency are clearly pointing to hyper-growth, which is difficult to achieve without a digital sales channel. By selling solutions through powerful digital marketplaces on ecosystem platforms, companies can be profitable and successful in different countries. Many complex tasks around legal requirements and guidelines of other countries are thereby automated by the software infrastructure behind the marketplace, so that companies spend less time on manual, time-consuming jobs and can focus more on their core business.

The benefits automated management of subscription models provides

The automated management of subscription models allows contractual modalities with partners and billing to be handled in the background, while at the same time providing accurate real-time insights into customers’ contracts, projects and profitability. Partners can thus build their own multichannel marketplace and manage both their inventory catalogue and that of third-party providers. Using automated management of subscription models eases the process involved for ISVs to place their products where the customer orders and remain competitive.